Collateral Estoppel In Bankruptcy Proceedings- Overview | DelCotto Law Group PLLC

Collateral estoppel applies in bankruptcy proceedings.

See Grogan v. Garner, 498 U.S. 279, 284, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) (A bankruptcy court may properly give collateral estoppel effect to those elements of the claim that are identical to the elements required for discharge and which were actually litigated and determined in the prior action); In re Brown, 489 Fed.Appx. 890(6th Cir. 2012). When assessing whether a state court judgment should be given preclusive effect in a nondischargeability action, a bankruptcy court may review the entire record in the state court case to determine the grounds for, or the meaning of, the state court’s judgment or order. Miller v.Grimsley (In re Grimsley), 449 B.R. 602, 615 (Bankr. S.D. Ohio 2011). State court judgments are entitled to preclusive effect in nondischargeability actions only if the law of that state would apply collateral estoppel to those judgments. In re Francis, 226 B.R. 385, 388 (6th Cir. BAP 1998). When applying collateral estoppel principles to a nondischargeability proceeding, a bankruptcy court is directed to apply the law of the forum where the original proceeding took place. Wolstein v. Docteroff (In re Docteroff), 133 F.3d 210, 214 (3rd Cir. 1997).

In Kentucky, issue preclusion bars the same parties from relitigating an issue actually litigated and finally decided in another prior action. Under this doctrine, a party is barred from re-litigating any issue actually litigated and finally decided in an earlier action. Buis v. Elliot, 142S.W.3d 137, 140 (Ky.2004) (citing Yeoman v. Commonwealth Health Policy Bd., 983 S.W.2d 459,464 (Ky.1998)). Under Kentucky law, to apply issue preclusion requires four elements. First, the issue in the second proceeding must be the same as the issue in the first. Yeoman, 983 S.W.2d at465. Second, the issue must have been actually litigated. Id. Third, the issue must have been actually decided. Id. Fourth, the decision on the issue must have been a necessary component of the prior proceeding. Id.


By: Jamie L. Harris, Esq.

Jamie Harris is a member with DelCotto Law Group PLLC. Her practice of law focuses on helping business owners hurdle financial obstacles. Jamie is best known for her experience in filing Chapter 7, 11, 12, and 13 bankruptcies. In her Chapter 11 cases, Jamie has represented companies from many different industries including healthcare, nonprofit, trucking, construction, commercial real estate and telecommunications.

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